Explain why oil companies are loosing money?

[Al]

Originally Posted By: kschachn

I'll tell you one thing. This current situation should shut up all the idiots that kept saying that supply wouldn't affect the market price of crude.

Not on this board it won't lol...

 

[HTSS_TR]

Originally Posted By: Al
Originally Posted By: kschachn
I'll tell you one thing. This current situation should shut up all the idiots that kept saying that supply wouldn't affect the market price of crude.
Not on this board it won't lol...

With crude oil at $30 a barrel, some posters here want to see gas price at $1 or less, because when crude oil was $140 gas was $4.

They totally ignore the fixed costs: tax, shipping, refining, retail cost and profit ...

Even if crude oil is zero, gas will not be under $1/gal, especially in California where we pay $60-70 cents just for Federal and State tax alone.

 

[NHHEMI]

Originally Posted By: HTSS_TR
Originally Posted By: Al
Originally Posted By: kschachn
I'll tell you one thing. This current situation should shut up all the idiots that kept saying that supply wouldn't affect the market price of crude.
Not on this board it won't lol...

With crude oil at $30 a barrel, some posters here want to see gas price at $1 or less, because when crude oil was $140 gas was $4.

They totally ignore the fixed costs: tax, shipping, refining, retail cost and profit ...

Even if crude oil is zero, gas will not be under $1/gal, especially in California where we pay $60-70 cents just for Federal and State tax alone.


While I agree with the general point you are making( there is more to the cost of gas than just crude )you have to remember that when crude was at or below the low $20 range gas typically was at or under $1 a gallon for many people. Change $1 to whatever figure would equate to the overall higher cost in CA vs the national average.

Crude is now in the upper $20 range but gas is STILL at almost $2 here( low $1.90 range ). Should be well under $1.50 based on past pricing vs crude costs. There has always been taxes and costs asociated with gas prices. Seems to me that prices should be much lower then they are based on history which is I believe the other's point.

FYI back in the early 2000's before the insansity hit the energy world, and then Katrina, I was paying $0.95-$0.99 p/gallon of r87 here in many places. The high areas would be around $1.05. Wasn't all that long ago I saw sub $1 gas.

 

[kschachn]

Originally Posted By: NHHEMI
While I agree with the general point you are making( there is more to the cost of gas than just crude )you have to remember that when crude was at or below the low $20 range gas typically was at or under $1 a gallon for many people. Change $1 to whatever figure would equate to the overall higher cost in CA vs the national average.

Crude is now in the upper $20 range but gas is STILL at almost $2 here( low $1.90 range ). Should be well under $1.50 based on past pricing vs crude costs. There has always been taxes and costs asociated with gas prices. Seems to me that prices should be much lower then they are based on history which is I believe the other's point.


So the crack spread, transportation costs and taxes (not just per-gallon fuel taxes) have remained stagnant over the past 15 years?

Even if you say they have remained constant, were do you think the extra is going?

 

[DoubleWasp]

Originally Posted By: NHHEMI
Originally Posted By: Drew99GT
Originally Posted By: grampi
Originally Posted By: Drew99GT
Fracking companies in the US are getting creamed currently. That is one of the main drivers of the current market slump since many fracking operations were leveraged to the ceilings with junk debt which has collapsed along with oil prices.

http://www.wsj.com/articles/oil-plunge-sparks-bankruptcy-concerns-1452560335

So how are some companies losing money? It's pretty simple when they have break even costs per barrel above $60/70 a barrel and the prices collapses! The price collapse has many reasons; Saudi Arabia/OPEC trying to force them out via increased production, the increase in output from North American shale itself, simultaneously as China's bubble pops which leads to a decrease in oil demand. It's a perfect storm of circumstances that is now unwinding.


Break even point of $60/$70? That must be another exaggeration claim by the industry, just like them claiming they're losing money....if they were actually hurting as bad as they claim they are, considering how long oil has been cheap now, they would've gone under by now....


There is this thing called debt and derivatives. It's how many companies survive. Amazon hasn't made a profit in a decade and is thriving.

http://www.reuters.com/article/idUSL3N0SH5N220141023


Then it is slight of hand financing and accounting. NO business goes a decade without a profit and survives let alone thrives. Money is being made but the accountants make it look otherwise.


Tesla has sure figured out the formula.

 

[NHHEMI]

Originally Posted By: kschachn
Originally Posted By: NHHEMI
While I agree with the general point you are making( there is more to the cost of gas than just crude )you have to remember that when crude was at or below the low $20 range gas typically was at or under $1 a gallon for many people. Change $1 to whatever figure would equate to the overall higher cost in CA vs the national average.

Crude is now in the upper $20 range but gas is STILL at almost $2 here( low $1.90 range ). Should be well under $1.50 based on past pricing vs crude costs. There has always been taxes and costs asociated with gas prices. Seems to me that prices should be much lower then they are based on history which is I believe the other's point.


So the crack spread, transportation costs and taxes (not just per-gallon fuel taxes) have remained stagnant over the past 15 years?


I didn't say they stayed stagnant. I don't expect the same for ever. I do think the price is too high though relative to the cost of crude. Should it be a $1? No. Should it still be at $2? Also no.

 

[kschachn]

Originally Posted By: NHHEMI
I didn't say they did. They certainly haven't gone up enough( here anyway )to justify what gas is costing now with crude where it is. $1 no but $1.24-$1.35 seems about right.


What are you basing that on? Feelings or do you have data?

 

[NHHEMI]

Originally Posted By: kschachn
Originally Posted By: NHHEMI
I didn't say they did. They certainly haven't gone up enough( here anyway )to justify what gas is costing now with crude where it is. $1 no but $1.24-$1.35 seems about right.


What are you basing that on? Feelings or do you have data?


Edited my original comment but you had already quoted.

 

[grampi]

Originally Posted By: kschachn
Originally Posted By: grampi
No, I'm saying that claiming it costs $60/$70 to bring oil to the market is just another typical exaggeration by the industry...and why do people think it's necessary for the oil industry to rake in record profits every month? The oil industry is a business just like any other business. Why should they be impervious to the ups and downs that ALL businesses are subject to? I have better years than others, and I have worse years. I survive and so will the oil industry...their CEOs may have to lay off of the multi-hundred million dollar pensions for a while...


Impervious?? Are you crazy? Go look at historical data for the oil companies and compare profits against the price of oil. Then tell me if they make the same profit when prices are low.

I'll tell you one thing. This current situation should shut up all the idiots that kept saying that supply wouldn't affect the market price of crude. This mantra was repeated ad nauseam a few years back during debates about exploration and drilling. Of course it will be forgotten by some people when prices rise, it probably doesn't matter what the truth is. Those individuals just persist in claiming that in some magical and mysterious way the oil companies control the price of oil.


The oil industry does control prices by controlling supply. What is taking place right now is a prime example...flood the market with product and prices tank...and when supplies are tight (either because of actual supply shortages, or concocted shortages created by the inudtry) and prices soar....

 

[grampi]

Originally Posted By: NHHEMI
Originally Posted By: kschachn
Originally Posted By: NHHEMI
I didn't say they did. They certainly haven't gone up enough( here anyway )to justify what gas is costing now with crude where it is. $1 no but $1.24-$1.35 seems about right.


What are you basing that on? Feelings or do you have data?


Edited my original comment but you had already quoted.


The big oil cheerleaders will never stop defending the industry...they all believe it's this squeaky clean, completely moral and legal enterprise that never does anything wrong, and never purposely does anything to pad their profits...I just don't get what they get out of the deal by always defending the actions of the industry...it must be some kind of a deal the industry has with their shareholders to give out bonuses to defenders...

 

[kschachn]

Originally Posted By: grampi
The big oil cheerleaders will never stop defending the industry...they all believe it's this squeaky clean, completely moral and legal enterprise that never does anything wrong, and never purposely does anything to pad their profits...I just don't get what they get out of the deal by always defending the actions of the industry...it must be some kind of a deal the industry has with their shareholders to give out bonuses to defenders...


Did I say that? Nope, can't see where I did.

 

[grampi]

Originally Posted By: kschachn
Originally Posted By: grampi
The big oil cheerleaders will never stop defending the industry...they all believe it's this squeaky clean, completely moral and legal enterprise that never does anything wrong, and never purposely does anything to pad their profits...I just don't get what they get out of the deal by always defending the actions of the industry...it must be some kind of a deal the industry has with their shareholders to give out bonuses to defenders...


Did I say that? Nope, can't see where I did.


You have certainly been defending them....

 

[NHHEMI]

Originally Posted By: grampi
Originally Posted By: kschachn
Originally Posted By: grampi
The big oil cheerleaders will never stop defending the industry...they all believe it's this squeaky clean, completely moral and legal enterprise that never does anything wrong, and never purposely does anything to pad their profits...I just don't get what they get out of the deal by always defending the actions of the industry...it must be some kind of a deal the industry has with their shareholders to give out bonuses to defenders...


Did I say that? Nope, can't see where I did.


You have certainly been defending them....


That is how I see it as well grampi.

 

[kschachn]

Originally Posted By: grampi
You have certainly been defending them....


More like correcting factual errors.

 

[NHHEMI]

Originally Posted By: kschachn
Originally Posted By: grampi
You have certainly been defending them....


More like correcting factual errors.


More like making excuses for and defending.

 

[HTSS_TR]

Originally Posted By: grampi
The big oil cheerleaders will never stop defending the industry...they all believe it's this squeaky clean, completely moral and legal enterprise that never does anything wrong, and never purposely does anything to pad their profits...I just don't get what they get out of the deal by always defending the actions of the industry...it must be some kind of a deal the industry has with their shareholders to give out bonuses to defenders...

Remember one thing: We in California are paying about $1/gal more than national average, because we use special formula that only refineries in CA produce it, this special formula costs about 15-120 cents more a gallon, state tax is higher too also gas stations cost is higher too.

Even we are paying higher price but we still think that with all the hard works the US oil companies doing very good job making the drivers have gas to go anywhere we like at reasonable price.

The oil companies on average were/are earning about 10-15% profit compares with much higher profit from other industries, such as pharmaceutical, finance, high tech(such as Apple) ... Sometimes they lost big money in exploration and came up empty hand. Shell lost $5 BILLION in Alaska few year ago.

Quote:
After investing an estimated $5 billion in recent years into oil exploration in the offshore Alaskan Arctic, Shell announced Thursday that it will abandon any renewed drilling effort this year.

http://articles.latimes.com/2014/jan/30/...illing-20140130

If you look at the cost of finding, extracting and transporting crude oil you will see that their profits are reasonable.

If you look at the price of a gallon of milk and a gallon of gas, you should see that gas is cheap. Looking at the black crude oil and finished gallon of gas you should be amazed that they can refining it so cheap, looking at a gallon of milk from a cow and a gallon of milk you buy in super market do you see the big difference ?

Summary: I am very thankful for being able to buy gas whenever I need it at reasonable price, my only wish is we use similar formula as the rest of the country so that we don't have to rely on only few refineries in California.

 

[HTSS_TR]

Originally Posted By: NHHEMI
While I agree with the general point you are making( there is more to the cost of gas than just crude )you have to remember that when crude was at or below the low $20 range gas typically was at or under $1 a gallon for many people. Change $1 to whatever figure would equate to the overall higher cost in CA vs the national average.

Crude is now in the upper $20 range but gas is STILL at almost $2 here( low $1.90 range ). Should be well under $1.50 based on past pricing vs crude costs. There has always been taxes and costs asociated with gas prices. Seems to me that prices should be much lower then they are based on history which is I believe the other's point.

FYI back in the early 2000's before the insansity hit the energy world, and then Katrina, I was paying $0.95-$0.99 p/gallon of r87 here in many places. The high areas would be around $1.05. Wasn't all that long ago I saw sub $1 gas.

Today gas price isn't related to today crude oil. Today gas is refined from crude extracted a while ago, today crude oil price will reflect near future gas price, may be a week or two.

You should take into account up to date these costs for estimating the price of gas you can buy at local stations:

Crude oil price
Transportation crude oil to refinery
Refining crude oil to gas
Gas additives
Transporting gas to retail station
Retailer overhead cost and profit
Oil company overhead cost and profit
Federal and state taxes

Many of these costs went up over the last 10-20 years, almost nothing has negative inflation.

If you look at oil companies quarterly finance reports next quarter you will see that their profit will be much lower than previous quarters.

How much profit should an oil company make ? 10% is too much or too little ? Who should determine how much a company can earn ?

 

[NHHEMI]

Originally Posted By: HTSS_TR
Originally Posted By: NHHEMI
While I agree with the general point you are making( there is more to the cost of gas than just crude )you have to remember that when crude was at or below the low $20 range gas typically was at or under $1 a gallon for many people. Change $1 to whatever figure would equate to the overall higher cost in CA vs the national average.

Crude is now in the upper $20 range but gas is STILL at almost $2 here( low $1.90 range ). Should be well under $1.50 based on past pricing vs crude costs. There has always been taxes and costs asociated with gas prices. Seems to me that prices should be much lower then they are based on history which is I believe the other's point.

FYI back in the early 2000's before the insansity hit the energy world, and then Katrina, I was paying $0.95-$0.99 p/gallon of r87 here in many places. The high areas would be around $1.05. Wasn't all that long ago I saw sub $1 gas.

Today gas price isn't related to today crude oil. Today gas is refined from crude extracted a while ago, today crude oil price will reflect near future gas price, may be a week or two.

You should take into account up to date these costs for estimating the price of gas you can buy at local stations:

Crude oil price
Transportation crude oil to refinery
Refining crude oil to gas
Gas additives
Transporting gas to retail station
Retailer overhead cost and profit
Oil company overhead cost and profit
Federal and state taxes

Many of these costs went up over the last 10-20 years, almost nothing has negative inflation.

If you look at oil companies quarterly finance reports next quarter you will see that their profit will be much lower than previous quarters.

How much profit should an oil company make ? 10% is too much or too little ? Who should determine how much a company can earn ?


AGAIN, I dn't expect it to be as low as it was 10 years ago. HOwever, I do feel it is higher than need be( accounting for inflation ).

 

[HTSS_TR]

Originally Posted By: NHHEMI
AGAIN, I don't expect it to be as low as it was 10 years ago. However, I do feel it is higher than need be( accounting for inflation ).

It's hard to say who makes the most profit with current crude oil and gas price. Is it oil companies or distributors or retailers ?

At the very least you should be glad that you don't pay as much as drivers in European countries, their whole sale price are similar to us but their tax are much higher therefor their price can be as much as 2-3 times US average.

 

[HTSS_TR]

If you looking up Costco gas price in Orange County, CA you can see that the lowest price for regular today is $2.49 in Fullerton and $2.85 in San Juan Capistrano, 36 cents more or 15% higher.

In a small county the price of gas of the same retailer can be as much as 15% different. As far as I know Costco has every products the same price within a state, probably within US, but not gas. Is this because each location is charged different price by distributor ? or the extra cost of transportation ? or other reasons ?